Published: Sunday - 2nd August, 2015
The Government of Nepal promulgated budget for the fiscal year 2072/2073 on 7/14/2015. This year the Government has allocated a total of Rs819.46 bn for the budget which is 33% more than the figure from FY71/72 and 58% more than the figure from FY70/71.The main reason behind such a huge jump on the figure this year is due to allocation for reconstruction and rehabilitation work – which is around Rs74 bn. If we take this component out of the budget for this year, the overall budget increment is around 20%.The Government has set aside an aggressive goal for economic growth of 6% which is the same goal which it had set last year. However, Nepalese economy grew only by 3.04% last year as it was severely impacted by the Gorkha earthquake and its subsequent aftershocks. Given the damage caused by the earthquakes, it will be seemingly impossible for the Government to meet the growth rate of 6%. Learn More »

Nepal, with a total area of 147,181 km2 and population of around 27million (according to Central Bureau of Statistics, Nepal), sits between China and India. It is a landlocked nation that heavily depends on import and remittance to keep the country running. The latest report shows that GDP of Nepal stands at Rs2124.70 while the GDP is expected to grow by 3.00% as per the Government of Nepal (GoN). The current inflation rate in Nepal is around 7.20%.

The GoN has set aside a budget of Rs 819.46 for the FY 2071/72. This year, the government is focusing mainly on agriculture, tourism and energy sectors. Ministry of Finance publishes budget for the new fiscal every year around middle of July. This is due to the fact that in Nepal FY starts in Shrawan and ends Ashad (i.e., mid-July). Along with the budget comes the fiscal policy for that year. Once the fiscal policy is out, Nepal Rastra Bank (NRB) publishes monetary policy for that fiscal year.

Structure of Nepalese Financial Market

NRB is the central bank of Nepal which is the sole body that regulates commercial banks, development banks and finance companies. In addition to taking up the role of regulatory body, it also publishes monetary policy and various economic reports at regular frequency. As per NRB’s website, “it was established in 1956 under the Nepal Rastra Bank Act, 1955 to discharge the central banking responsibilities including guiding the development of the embryonic domestic financial sector. Since inception, there has been a significant growth in both the number and the activities of the domestic financial institutions.”

Structure of Nepalese Capital Market

The securities market in Nepal started in 1985 and it was only in 1994 that the first and only stock exchange of Nepal – Nepal Stock Exchange (NEPSE) - was established. NEPSE was established under the Securities Exchange Act, 1983 and it officially started trading since 1/13/1994. It started the automated screen based trading since 8/24/2007. Of late, it is working toward fully automating the trading system which will allow buyers and sellers from all over Nepal to start trading online. For this purpose, it has already opened Central Depository and Settlement services (CDS) in 2010. The CDS will allow buyers and sellers to buy and sell securities in dematerialized form.

The bourse is regulated by Securities Board of Nepal (SEBON) which was established on 1/7/1993. It has been closely monitoring and regulating the stock market under the Securities Act, 2006. All the listed companies at the NEPSE must submit their audited financial reports to SEBON every quarter and at the end of fiscal year.

Bullish to the Extreme

ResCon was established in 2007 with a vision to provide top notch research and consulting services to its clientele. It strongly believes in providing as much data as possible to help investors make correct and timely decisions when it comes to investing in Nepal. Soon after the establishment of the company, it saw Nepse - the sole barometer of NEPSE - hit all time high in 2008. But the jubilance and exuberance was short lived as market started nose diving and all of a sudden, all the excitement was gone. The economy went through one of the toughest periods with real estate taking maximum hit. Had it not been for remittance, Nepal would have hit the rock bottom so hard that it would have taken years to stand right up. Luckily, with Maoists in main stream politics and possibility of dawn of new constitution, economy slowly started picking up. GDP showed positive progress and Nepse started climbing up. For those, who stuck during hard time can breathe sigh of relief.

For us too, had it not been to our positive and optimistic views, we would have gone down the barrel soon. We stuck with our motto - Bullish to the extreme - all these years and we continue to stick to it through thick & thin and ups & downs.

Signup for ResCon Newsletter

You have been successfully registered with ResCon. Thank you for subscribing with us.
:) You are already registered with us.